Brunswick Corporation BC
today announced it has agreed to sell its Retail Bowling business to
Bowlmor AMF for $270 million, contingent upon customary closing
procedures. Brunswick anticipates completing this transaction in
approximately 90 days.
In connection with its decision to sell its bowling centers, Brunswick
also announced its intention to divest its Bowling Products business.
Brunswick is targeting to complete that sales process by the end of
2014, during which time the Company will continue to operate the
business. Brunswick will retain its legacy and namesake Billiards
business.
Sale of Retail Bowling Business
Brunswick stated that it had found the Bowlmor AMF offer, which was
unsolicited, to be a unique opportunity to transfer ownership of this
business at an attractive valuation. "Brunswick Retail Bowling has long
been a solid contributor to our Company, and last year had approximately
$187 million in sales. After careful consideration, however, we
concluded that this transaction is in the best interests of our
shareholders and the Retail Bowling business," explained Brunswick
Chairman and Chief Executive Officer Dustan E. McCoy.
"The bowling industry has been evolving as center counts decline and the
customer mix shifts from predominately league bowling to casual bowlers
seeking an entertainment-oriented experience. For Brunswick to drive
growth in this business, it would take continual development of new
entertainment concepts and significant additional investment to
implement these new concepts at new properties or to convert existing
centers. We believe directing investments into select portions of our
core Marine operations as well as our Fitness business provide better
opportunities for greater returns. In 2013, the Marine and Fitness
businesses together accounted for 92 percent of Brunswick's net revenues,
" McCoy continued.
"Conversely, Bowlmor AMF's primary strategic objective is to invest in
and grow its retail bowling business, which includes proven
entertainment concepts in certain of its centers. With the addition of
the Brunswick locations, Bowlmor AMF will increase its center count to
343 in North America, and, it will add some of the most dedicated and
talented people in retail bowling.
Exit of Bowling Products
"Finally, due to our exit from the Retail Bowling business, combined
with similar market dynamics, we have retained Lazard to seek a suitable
buyer for our Bowling Products business," McCoy concluded.
Brunswick stated its current plan assumes that the eventual purchaser
will retain both the manufacturing operations and the talented workforce
of Bowling Products. During the sale process, Bowling Products will
maintain ongoing operations and conduct business-as-usual, while keeping
its employees, distribution network and customer base informed of the
sale's progress.
Restatement of Financial Results
As a result of the Company's announced sale of its Retail Bowling
business and its intention to sell its Bowling Products business,
beginning with the third quarter of 2014, Brunswick will report the
results of these businesses, which were previously reported in the
Bowling & Billiards segment, as discontinued operations. In addition,
the results of the Billiards business will be included in the Company's
Fitness segment.
Attached to this release, the Company has provided certain restated
financial information for 2012, 2013 and the first quarter of 2014.
Impact on 2014 results and 2016 targets
As a result of these divestitures and associated discontinued operations
treatment, Brunswick estimates the dilution to EPS from continuing
operations, on both a GAAP and as adjusted basis, to be approximately
$0.20 per diluted share for the full-year 2014. Further, Brunswick
estimates that for 2014, the free cash flow from continuing operations
will be lower by $35 million to $40 million.
The Company continues to believe it can achieve the long-term financial
targets included in its three-year plan. Therefore, the Company
maintains its original base case target of $3.00 to $3.40 earnings per
diluted share in 2016.
Use of Proceeds
"Going forward, we anticipate net proceeds from both these divestitures
and associated actions, which reflect our current estimates for taxes
and liabilities to be paid, to approximate $270 million to $290 million.
We believe our best opportunity to increase shareholder value is to use
these net proceeds to strengthen our Marine and Fitness segments.
Further, we plan to consider the following: increasing the quarterly
dividend, accelerating contributions to the Company's underfunded
pension plans as part of our de-risking strategy, and establishing a
share repurchase program," McCoy explained.
"Our highest priority will be to target investment opportunities in
segments such as marine parts and accessories along with those in
Fitness. Brunswick already has completed one such investment by
acquiring Whale, a leading marine parts and accessories provider, and we
anticipate additional acquisition activity in this area," McCoy
explained.
Conference Call
Brunswick will have a conference call today at 4 p.m. (CDT). Security
analysts and investors wishing to participate via telephone should call
877-280-4956 (passcode: Brunswick). Callers outside of North America
should call 857-244-7313 (passcode: Brunswick) to be connected. These
numbers can be accessed 15 minutes before the call begins, as well as
during the call. To listen via Internet go to
http://www.brunswick.com/investors. You will also find slides of the
presentation on the website. A replay of the conference call will be
available through midnight (CDT) July 24, 2014, by calling 888-286-8010
or international dial 617-801-6888 (passcode: 25247783). The replay
also will be available at www.brunswick.com.
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